Fraud Investigations: Investigating Scams, Schemes and Deception

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fraud investigations
Fraud investigation resources for private investigators.

In 2017, consumers lost an estimated $16 billion to online fraud. This article provides an overview of various frauds, scams and schemes used by criminals to deceive unsuspecting people into revealing personal information. Although there are many different types of scams, this article covers general fraudulent emails, jury duty scams, lottery and inheritance schemes, relationship fraud and secret shopper offers. The ultimate goal of most of these scams is identity theft.

What is Fraud?

In criminal law, fraud is the crime or offense of deliberately deceiving another in order to damage them – usually, to obtain property or services from him or her unjustly. Fraud can be committed through many methods, including mail, wire, phone, and the internet fraud.  Fraud, in addition to being a criminal act, is also a type of civil law violation known as a tort. A tort is a civil wrong for which the law provides a remedy.

A civil fraud typically involves the act of making a false representation of a fact susceptible of actual knowledge which is relied upon by another person, to that person’s detriment.

How to Deal With Fraudulent Emails

If you receive an email that is clearly fraudulent, exercise immediate caution. Emails of this type are designed to get you to provide personal information such as your bank account number, routing number, social security number, birth date, etc. The information obtained is then used to secure a credit card in your name, or draft a payment from your checking or savings account. Report it to your internet service provider and to your email hosting provider, then add to your spam filter and delete the original message.

Under no circumstances should you respond to the message and definitely do not provide any information requested. Fraud email messages of this nature can often be very convincing, tempting you to respond. It is in your best interest to simply report it, delete and block so you won’t receive this type of junk in the future.

Jury Duty and Juror Schemes

Most people take a court summons for jury duty very seriously. When most citizens receive a notice to report for duty, they take the day off work or school and head to the court house. However, enough people skip out on their civic duty, that a new and ominous kind of fraud has surfaced. In what is known as a “jury duty scam”, the fraudulent caller claims to be a jury coordinator or another officer of the court.

If you protest that you never received a summons for jury duty, the scammer asks for personally identifiable information so they can check to see if you have an arrest warrant. Usually, the scam artist asks for your Social Security number and date of birth so he or she can verify the information and cancel the arrest warrant. Once the caller has this information, they have all they need to begin the process of stealing your identity. They can apply for credit cards, loans, open bank accounts and more.

The jury duty fraud has been reported so far in 11 states, including Oklahoma, Illinois , and Colorado. This type of scheme is particularly insidious because they use intimidation over the phone to try to bully people into giving information by pretending they are with the court system.

The Federal Bureau of Investigation and the federal court system have issued nationwide alerts on their web sites, warning consumers about the fraud. Beware and remember, never give out personally identifiable information over the phone.

Lottery and Inheritance Scams

In recent years, lottery and inheritance scams have become a popular form of fraud. Scam artists and fraudsters contact unsuspecting people and inform them that they have won a large some of money, either in a lottery, or in an inheritance from a relative.

Quite often, the schemers are able to produce documents that appear to be legitimate, such as official checks, wills, award letters or contracts. Victims can be easily fooled by the convincing appearance of the communications and the promise of receiving large sums of money. Here are a few tips to share with your family, friends, and clients to help you avoid becoming a victim of a lottery or insurance scam:

  • Always be very skeptical of any unsolicited letters, calls, or emails informing you that you’ve won a lottery. Lotteries simply don’t work that way. Generally, you have to buy a ticket or submit an entry to win. So, if you didn’t play a lottery, you didn’t win.
  • Ignore any communications from foreign lotteries, paying attention to the address or phone number from the notice
  • Legitimate lotteries don’t require winners to pay fees to collect winnings, or to provide personally identifiable information such as birth date or social security numbers. Once they ask for this information hang up and discontinue all communications.
  • Check with relatives about recent deaths in your family. Confirm the person is a member of your family, and they have in fact passed away, before responding. Even then, be suspicious.
  • Never give out personal or financial information to anyone over the Internet or telephone

Follow these simple steps to help keep you and your family safe from these types of fraudulent scams.

Relationship Scams, Schemes and Dating Fraud: Con Artist Specialties

The internet provides anyone with the opportunity to establish both business and personal relationships with people from around the world. Unfortunately, fraudsters and scam artists often exploit this opportunity by preying on individuals who frequent internet chat rooms, online dating services, social networking sites, and other online locations. As a result, relationship scams are on the rise.

The schemers establish an online relationship with a potential victim by requesting emotional support for some personal event. By doing this, the scammer slowly cultivates a relationship that they hope will translate into significant goodwill and ultimately into financial gain. The relationship can continue for weeks, months, and sometimes even years. After a successful online courtship, the scammer may ask the victim to assist them financially in order to remedy some traumatic situation such as the loss of a loved one, pending loss of a home, loss of their job, or other emergency. Some of the most common reasons “angles” include:

  • The individual or a family member needs medical attention
  • The individual is a victim of a violent crime and they’ve been robbed of their belongings
  • The individual would like to visit but needs funding for airline tickets, visas, or excessive customs costs.

Whatever the situation, the scammer asks the victim for money or requests for them to send traveler’s checks, money orders, or some other financial item to negotiate. They instruct the victim to wire the funds to a third party such as a doctor, or hotel manager.  It’s likely that any proposed transaction will involve counterfeit or altered items. Here are some tips to avoid relationship scheme and internet dating fraud:

  • Be cautious when meeting people on the internet. Remember, they can pretend to be someone they aren’t.
  • Be suspicious by default. Make others prove to you that they are a real individual, and they are who they say they are.
  • Do not negotiate items on behalf of someone else
  • Do not send money by money transfer to someone you do not know.
  • Once someone asks for money, be suspicious of their behavior and consider every move you make very carefully.
  • Never give out any personally identifiable information such as your address, birth date, phone number, or social security number. Make it your goal to give them nothing.

Following these simple steps will help you avoid becoming a victim of a relationship scam.

Secret Shopper Offer Scams

If you receive emails about becoming a “secret shopper”, please be aware that it is fraudulent and is part of a worldwide scheme, but focused mainly in the United States. Fraudulent secret shopper scams of this type are designed to get you to provide personal information such as your bank account number, routing number, social security number, birth date, etc. The information obtained is used to secure a credit card in your name, or draft a payment from your checking account. If you receive this email, please report it to your internet service provide and to your email hosting provider.

List of Fraud Investigation Resources

Following are websites that provide information on various types of business fraud, computer fraud, internet fraud.  Many of the websites provide tips and suggestions for preventing and protecting yourself from fraud and allow you to file a formal complaint.

Federal Trade Commission – File a complaint with the Federal Trade Commission if you suspect you are a victim of identity theft, scams and ripoffs, unwanted telemarketing texts and SPAM and others.

Financial Crimes Enforcement Network – FinCen works to safeguard the financial system from illicit use, combats money laundering and promote national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.

Internet Crime Complaint Center – The Internet Crime Complaint Center (IC3) is a partnership between the Federal Bureau of Investigation (FBI) and the National White Collar Crime Center (NW3C).IC3 accepts online Internet crime complaints from either the person who believes they were defrauded or from a third party to the complainant.

National Consumer’s League Internet Fraud Watch – Now Fraud.org, is dedicated to consumer education and advocacy related to Internet and telemarketing fraud prevention

National White Collar Crime Center – Provides a nationwide support system for agencies involved in the prevention, investigation, and prosecution of economic and high-tech crimes and to support and partner with other appropriate entities in addressing homeland security initiatives, as they relate to economic and high-tech crimes.

What Private Investigators Need to Know

Private investigators are hired to uncover information on a broad range of topics. A private investigator with strong skills in surveillance may be hired to follow subjects who may be involved with insurance scams. Other private investigators with forensic accounting skills may be hired to uncover embezzlement schemes or employee theft.

If you have any questions about fraud investigations, please post a comment below. Also, learn more about other Frauds, Scams and Schemes.

Michael Kissiah is the owner of Brandy Lane Publishing, LLC, which owns and operates a small portfolio of websites, including eInvestigator.com. Michael created eInvestigator.com more than 20 years ago after working as a private investigator in the state of Florida. Since that time, he has become an expert at how to find information online and has written over 1000 articles on topics related to the investigation industry. In addition, he is the author of the "Private Investigator Licensing Handbook", available at Amazon.com.

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